City collects US$120 million in vehicle taxes

City collects US$120 million in vehicle taxes

JAKARTA (JP): The city's revenues from vehicle taxes in the 1995/1996 fiscal year have so far totaled Rp 276.18 billion (US$120 million), Rp 6.5 billion of which comes from the implementation of a progressive tax system.

The head of the city council's commission C for finance, Helmy AR Syihab, said yesterday that the amount was higher than the Rp 5.24 billion estimation made in 1994.

Helmy said that the tax system, which was introduced last year, has successfully increased the city's revenues but it has not slowed down the growth of private cars.

"The tax has significantly influenced the city's revenues but it has failed to stop people from buying more cars," he said.

The regulation requires motorists to pay 120 percent of the effective car tax rate for a second car. The tax rises to 140 percent for the third car, 160 percent for the fourth and subsequent cars.

The city administration has set a total vehicle tax target in the next fiscal year of Rp 321 billion, Helmy said.

In the 1995/1996 fiscal year, which ends on 31 March, the revenues from the new car tax totaled Rp 580 million and the city administration has increased the target to Rp 725 million for the next year.

The progressive car tax system is aimed at creating a fair tax system in which rich people should pay more for their second, third, fourth and subsequent cars.

On the other hand the system is also aimed at slowing the growth of the number of private vehicles and promoting the use of public transportation.

The City Council estimated last year that around 130,000 of the 1.8 million passenger cars registered in the city would be subject to the progressive tax rates.

The Ministry of Home Affairs last year approved the progressive car tax system to be enforced in Jakarta one year after the City Council approved the regulation in July 1994.

The city administration began enforcing the regulation on April 1, 1995. (yns)